Kenneth Rogoff, Professor of Economics and Public Policy at Harvard University and recipient of the 2011 Deutsche Bank Prize in Financial Economics, was the chief economist of the International Monetary Fund from 2001 to 2003. His most recent book, co-authored with Carmen M. Reinhart, is This Time is…read more

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The demographic dividend that India is projected to reap over the next couple of decades is going to be largely provided by the economically weaker states of Bihar, West Bengal, Uttar Pradesh, Rajasthan and Orissa, where fertility rates are still high. Devolution is not the key, rather a consistent focus to improve education, healthcare, training, livelihood in these states is important to create a workforce, that can provide dividends. So, welfare and budgetary devolution is not only unwise, but also unjust.

Further, a fair amount of efficiency is reduced not because of economically weaker states dragging the stronger ones, but because of corruption, which is rampant across all regions. Maharashtra, Karnataka, Andhra Pradesh or Tamil Nadu, all are equally infested with graft. The recent anti-corruption drive might go a long way in making the basis of next general elections to be corruption, and probably institution of a constitutional authority of Ombudsman. Only by achieving more economic efficiency through less corruption can India achieve a sustained growth.

Having said that, given that India has a federal structure of governance, to some extent, policy devolution is already taking place. States have been given a discretion in allowing FDI into multi-brand retail trading within their territories. The JNNURM incentivises state governments to undertake urban policy reforms to get financial assistance from the central government.

And such measures, although still undesirable due to potential economies of scale, are inevitable, and probably work, in a democracy of 1.2 billion, as you have written. Read more

Indian dynamics are not really comparable with the falling dynamics of global economy. Indian government and the central bank is doing the balancing act very well and maintaining a steady growth as well.Reforms are not stalled - I am not sure what is the reason on this comment. Reforms being executed is always slow in a massive democracy and there are several non economic but constructive reforms rolling out in parallel too.estimated from IMF etc are for world to be pacified and manipulated rather .These rating agencies are to pacify and hold wealth in some nations. India follows its dynamic balancing and growth irrespective of the IMF estimates. Read more

Understanding India would need a torturous journey a few hundred kilometers from the periphery or from any large city, into the interiors where a vast majority is living, very close to the Dark Ages. With rivers as the only source of running water, with no access to toilets, no schools, and health centers with no equipment and medicine, we have multitudes of people surviving on government sponsored Rs.2 /kg (4 cents/kg) rice. Statistics is very simple, 55% of people living in a rural economy where the whole of agriculture contributes to less than 25% of the GDP and is not growing as productivity is shrinking every year as more hands depend on less area of land. Industrialization and diversification of agriculture in some States like Guajarat have augured well, but lack of governance, which is exacerbated by corruption and lack of political will had taken its toll in most of the other States. Local politics, which is just a way to prolong the agony, takes the round to make the society be based on more divisive forces, so that leadership cannot take root to integrate the ideas of salvation. The core sector cannot function in such a sorry ground of constant in-fights where land acquisition is virtually stalled with no end in sight.

Reforms, in retail included, is just one other whiff of wishful thinking that would change nothing in the interiors of the country.

Who cares what rating agencies said? Why they still exist? We are talking about a group of companies with an incredible record of failure after failure. They should be eliminated of our society. Read more

FDI is a fickle thing- it can turn on as fast as it is turned off. As pointed out by M. Patel, structural reforms and transparency, are more important. Granted India is not doing too well there right now but some states, led by Gujarat and its dynamic leadership, are showing promise, and consequently, parts of India are growing faster and smarter. Let's hope that the vote for development, rather than caste politics, in states like Bihar and Gujarat spreads further. In the long term, India will do better not to rely too much on central government and its 5 year plans. Read more

Even economists need to study the POLITICAL and social realities of a region before offering an "analysis" and/or predictions regarding its socioeconomic future. Ancient cultures with complicated social systems in over-populated regions respond well to top-down economic reforms in dictatorships but aren't we supposed to all be cheering for the "democratization" of emerging economies? Or are we just disappointed that the Ghandis and their cronies aren't tough enough. Maybe they need to take a few lessons from the House of Assad or study the tactics used in Bahrein? In any case it's clear that it's necessary to read Aruhundhati Roy as well as K.Rogoff in order to understand what's at play in India and what its future might be. Read more

Not just the political and social systems and situations prevailing, but also the laws, their complexities, their vaguenesses, the discretionary powers in the rules associated with such laws and the resultant parallell systems that operate and are powers untom themselves. Beyond that, one should look at the effects of this type of top down environment on the people weilding the powers - who are part of the powers that be and you may begin to see, in about 2 decades what a mess it all is. Read more

It's actually very simple. Culture and Social systems are extremely poor predictor of prosperity. Neither the religion nor the culture could explain the vast gap between two germanys or two koreas or two latin countries. Compare North Korea with South Korea or East Germany with West Germany. Here is 1 country, 1 people and 1 culture which gets vivisected into 2 parts with 1 part embracing Socialism and another part embracing free-market. 50 years later, Socialist part is dirt poor and non-socialist part is well-off. Corruption and poverty is positively correlated with red-tape and Socialist/Communist type economic model. Solution is to cut the red tape. Read more

Most article on India's economy falsely equates FDI permit with Reform. This articles are lobbying for foreign investment with little regard for how sweet heart deals are cut. Investments are important but much more important is structural reforms.

Permit is an oxymoron of Reform. Current system of doling out sweet heart permits to chosen investor, in a non-transparent manner, will result in bad investments and corruption ( example: In 1993s, Enron lobbied and got a sweet heart deal to setup a power plant at Dabhol, India. Government of India owned banks were arm-twisted to provide loans to dabhol power corporation. The power plant built had very high fixed and operational cost making it unviable. After a bankruptcy, writeoff of billions of rupees, and in midst of a power crisis, The plant is still making losses and not running even at 50% capacity).

Walmart/McDonald should be welcomed to India but it is wrong to say that it will benefit India's poor because only upper middle class Indians can afford them. Poor would be simply shooed away at the entrance.

Joschka Fischer
laments the fate of the European Union in the wake of the latest round of the Greek drama.

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